What Are You Buying?

This is the third time I'm posting an article where I ask readers what their near-term purchases might be. I'm keen on making sure this blog is an interactive experience. I really enjoy sharing ideas with you readers out there as mutually learning from one another is one of the main purposes I commit myself to this blog.

The market has experienced quite a run-up lately. The S&P 500 is up 13.58% over the last month which leads me to believe that a downdraft in the market might be just around the corner. I'm certainly hoping there is, anyway. A lot of the stocks I keep on my watch list, which includes my own portfolio, are up quite a bit and a few of them are simply priced out of my buy range right now. But, one of my mantras is to purchase dividend growth stocks every single month with the funds that are left over after paying my expenses. This is my form of forced savings and dollar cost averaging. I do try, however, to purchase more when the market is down and less when the market is up. I do believe that in any market one is able to find attractively valued businesses relative to the overall market as I do not believe in the efficient-market hypothesis.

My $100 Phone Call

I'm going to write a quick article today about a phone call I made to Bank of America recently. As any reader knows, I'm extremely frugal and I look to maximize my money saving ability whenever possible. One avenue I use is credit card reward programs. I don't spend a lot of money, but if I can earn 1% or more back on my expenses than that's completely ok with me! Also, everyone should know I pay off all expenses at the end of every month. I carry NO credit card debt whatsoever. That would be very counterproductive to my investment gains.

As I wrote about recently, I use my credit card not only for day-to-day expenses but also as a last resort to pay bills as an emergency backstop. It's part of my emergency fund, and I'm ok with that. I like to have as much of my money as possible working for me in my Freedom Fund. I have, until now, only had one credit card. It's through Bank of America and it's a BankAmericard Cash Rewards credit card with 1% cash back on all purchases. It has a $5,000 credit limit. I've been generally happy with the card, however one minor thing did bug me a bit. Within a month of opening my card, BofA started running a promotion where new members would receive a rewards card with tiered cash back of 1%, 2% or 3% depending on the purchase (general, gas, groceries, etc.). On top of that, after spending at least $500 within 3 months the new member would receive a bonus $100 cash back reward. Pretty good stuff!

Abbott Laboratories (ABT) Is Splitting

Although this is probably news to few readers, Abbott Laboratories (ABT) has surprisingly announced plans to split into two separate companies. The first company, which will retain the Abbott Laboratories name, will keep the businesses in nutritional formula, medical products and generic drugs among other businesses. The second company, yet to be named, will focus on the research-based pharmaceuticals. Management seems to think that it's best to split the two businesses, as this will give investors more clarity on investment choices and also unlock shareholder value.

The main question becomes: is this a good move? What do you think? Any fellow ABT shareholders out there want to sound off?

I can see some benefits and some drawbacks here.

Perspective

I've heard stories before of people who have retired, and soon after retiring they experienced some type of misfortune that resulted in their death. I remember working with a guy a few years ago who told me a story about his grandfather who died of a heart attack a few months after retiring. These have always just been anecdotal examples, and I've never actually personally known someone who experienced this type of regrettable fate.

Until now.

As part of my job, which is working as a service advisor at a car dealership, I have to undergo continuous training which is designed to keep me fresh and knowledgeable with the product and techniques to improve my customer service skills. I've been doing this job now for over five years, and as such I tend to see the same instructors at these classes. It's a small world. One instructor, we'll call him "Bob", has led two classes I've attended. He was an affable guy, and fairly personable. One nice thing I always liked about Bob was that he usually let class out early. That's always much appreciated.

Weekend Reading - October 22, 2011

It's another beautiful weekend down here in southwest Florida. I'm blessed to live in paradise. I'm even more blessed to be part of a wonderful blogging community that features so many intelligent investors and people who think "outside the box". It's through the sharing of ideas that we all become better people. It's because of this community that I started saving most of my income and investing in dividend growth stocks. I'm glad to give back by providing a real-world example of how some of these ideas build wealth. You're looking at Exhibit A.

Two Industrials Catching My Eye

This article originally appeared on The Div-Net on October 13, 2011.

I'm a huge believer in investing in dividend growth stocks. In fact, I'm such a huge believer that I'm going to be investing the majority of my net income into such stocks every single month for the next 11 years. If I wasn't confident that this was a great way to build growing wealth I wouldn't be betting a significant part of my life on this strategy.

With all that being said, however, it must be noted that investing in the right companies at the right time is critical. I have over 50 stocks on my watch list at any given time, and although I consider all of them worthwhile investments...they aren't all worthwhile at the same exact time. Some companies are trading for more attractive valuations than others for many different reasons. There are microeconomics, macroeconomics, and individual company concerns that could be inflating or deflating a stock's price relative to the overall market. It seems that a number of the large blue chip companies like Procter & Gamble, Johnson & Johnson and Coca-Cola are trading for fairly lofty values and although I'm long all three I am not adding to my positions at this time.

Recent Buy

Well, by the title of this post you can probably tell what I'm going to talk (write) about today. The markets continue to sway back and forth and the volatility is just as high as ever. That still matters little to me, as my long-term plan is to continue to buy dividend growth stocks month in and out as part of a dollar cost average strategy. There are a lot of short-term headwinds, as the debt crisis in the Eurozone still has not been repaired and there are still concerns about a double-dip recession. My ability to forecast the future is still non-existent, however.

I recently added to one existing position and I opened a position with another equity. I'm pretty excited about both of these purchases, as I hand picked both of them and feel I got a good value on my price. Both of these equities were featured in an article when I recently asked my readers what they were buying.

My Thoughts On An Emergency Fund

 

An emergency fund can be a vital part of your overall economic and personal finance plan. While I don't believe in having a large part of your net worth in cash that sits in a bank account, an unforeseen accident or emergency can produce an immediate need for instantaneous cash. During times of distress cash is King. An emergency fund is basically cash set aside to pay for emergency expenses.

Accumulation Mode

I'm currently in "accumulation mode". What I mean by that is that I'm currently accumulating assets that will pay me to own them. These assets will fund my early retirement. Because of that, cash really does me little good. Cash in large amounts while I'm trying to accumulate equities provides an opportunity more than anything else. At this current time I think of having large amounts of cash as an opportunity to pounce on stocks when the market prices them at discounts to their intrinsic value. During these times of extremely low interest rates, having lots of money in the bank is counterproductive, as inflation will erode your purchasing power over time. Cash is historically a horrible investment vehicle.

Weekend Reading - October, 15, 2011

Another week is through, and the weekend has found it's way into my life. The market has been very kind to me, as the S&P 500 up almost 6% over the past five days. I don't particularly enjoy big market rebounds, as it simply makes the equities I'm interested in purchasing more expensive. However, it does look nice to see my net worth increase by a dramatic amount.

On a totally unrelated subject, my hometown of Detroit is killing it in the sports world. The Detroit Lions are 5-0, the Red Wings are 3-0 and the Tigers are two games away from the World Series. Awesome! That town has seen some rough times, so I'm glad to see a sports revival of sorts occurring this year.

It's Saturday night, we just had a beautiful sunset after eating some Mexican and the Tigers are up 2-0 on the Texas Rangers. It's a great weekend so far. I hope yours is doing just as well.

Here are some excellent articles from fellow dividend growth investors, frugalists and personal finance bloggers from the past week.

Consumer Stocks: Safety In A Volatile Market

This article originally appeared on  The Div-Net on October 6, 2011

As an investor, my primary objective is to preserve capital and then grow it. One of the best ways to preserve capital is to invest in defensive stocks that have less overall volatility than the general markets. These stocks usually aren't your fast growth stocks with huge catalysts behind them, but offer a sense of safety and stability...especially when there is so much uncertainty around us.

Income/Expenses For September 2011

Each month I will post my income/expenses for the previous month. I track every dollar in and out, so what you see is exactly what I earned and spent (rounded to the nearest dollar).

Dividend Income Update - September 2011

September's dividend income numbers are fresh off the press and I'm writing today to present them to you. My main reason for investing in dividend growth stocks is to receive an ever-increasing stream of passive income. It's through this rising stream of dividends that I'll become financially independent, using them to pay expenses one day. Although that day is still quite far off, it's extremely fun to see the progress improving every month and I love to document that progress.

What Are You Buying?

I've always been pretty open with my investment moves, for better or worse. I always let you know what I've recently purchased, usually within just a few days of buying. Doing so is part of my overall mission with Dividend Mantra, and that is to provide a live journal on the road to early financial independence.

This will be my second time asking my readers about what their near-term purchases might be. In return for that information, I'm going to provide you information on what I'm currently looking at. I'm always looking at quality companies that provide products that people need, growing EPS and revenues, growing dividends with a pretty strong entry yield.

Weekend Reading - October 8, 2011

It's been a whirlwind week. Sometimes, the time passes by so fast that it saddens me. I can think of few things more important than savoring every minute, because once time passes you by...once a moment is gone, you'll never have it back again. We need to look no further than the recent death of Steve Jobs to realize that. The next moment is never promised to you. Life is a precious gift, and one that should not be wasted or given away. It's in the loss of people that I find renewed energy and motivation to continue doing what I'm doing.

But, enough about all that. It's a beautiful weekend, and every moment is precious. I think this evening is going to bring me relaxation and some time away from everything. I'm going to pop in a movie and enjoy the time that I have.

Here are some excellent articles from fellow dividend growth investors, frugalists and personal finance bloggers from the past week.

Recent Buy

 

The market's volatility has been a little head-spinning lately. It's easy to get blurry eyed and dizzy, but I try to keep my head on straight and stay focused on my long-term goal to build a passive income stream to exceed my monthly expenses. This week has actually been pretty light, with the Dow Jones Industrial Average having a rough start on Monday, but bouncing back quite nicely over the last couple days. The DJIA finished up 131 points today.

My recent buy was a little different from my normal moves. I haven't documented any stock sales since I started this blog, as every position I enter I plan to hold for a very long time. However, the choice to sell a position was essentially made for me, as Harleysville Group Inc. (HGIC) agreed to be bought out by Nationwide for $60 per share. This was great news for me, as HGIC was trading well below my cost basis. This instead turned out to be quite a large profit for me. I decided to sell all 64 shares of HGIC on 10/3/11 for $58.73 per share. I then took those funds and reinvested it into three separate companies. This will be one of the rare times I use profit from a sale to make other purchases, as I usually use collected dividends and capital from my day job to buy stocks. I will highlight my three purchases below:

Dividend Growth Index - My Picks Explained

The Dividend Growth Index was a project that started last week by Mike over at The Dividend Guy Blog and involves a total of eight bloggers who picked three stocks each for a total of 24 stocks. I'm writing this article today to explain my three stock choices for the index. I'm pretty excited about my picks and this index as a whole. This is going to be a fun, long-term project that shows readers the power of compounded dividends as well as the resilient nature of strong dividend paying companies.

A quick note before I begin: Dividend Growth Investor has joined this project, and we're all extremely excited to have this esteemed investor and blogger involved. Dividend Growth Investor is one of the most popular dividend growth oriented blogs available on the internet and he's extremely knowledgeable on this subject. He puts his money where his mouth is and invests a lot of his hard-earned money in the stocks he continually recommends. His three picks are as follows:

Freedom Fund Update - October 2011

Well, the time has come to update the Freedom Fund once again as we start another month. The Freedom Fund is my portfolio, and I think it's aptly named. My portfolio is my way to freedom; freedom from working at a job I don't enjoy to purchase goods I don't need to impress neighbors I don't care about.

The market's volatility continues as we wind down the summer and enter fall. I think large and rapid swings in the markets are here to stay, especially as the eurozone's debt woes continue. There are a lot of reasons to stay in cash and hide under a rock. The housing crisis continues, there are experts that believe another recession is unavoidable, and the unemployment numbers continue to depress economists and investors alike.

With all the bad news abound, it must be hard to continue to invest in equities as a major drop in the market must be just around the corner. Well, I'm here to tell you that my journey is still on course and I continue to dollar cost average my way into dividend growth equities month after month. I believe that this is fundamentally a wonderful strategy to build wealth over the long haul. There will be difficult times ahead, and at times I may even wonder how I'll stick to my guns. I will stick to the plan because if you fail to plan, you plan to fail. If you follow the news and move your money around left and right you'll never go anywhere.

Weekend Reading - October 1, 2011

October is here, and fall is in the air. Here in southwestern Florida we don't actually get the brisk fall breezes and change in colors, but we do get beautiful mid-80 degree weather, low humidity and lots of sunshine. I'm very excited and just got back from spending a few hours at the beach today. Woo-hoo!

It's been a busy week. If you haven't already read about it, the Dividend Growth Index project has been started by The Dividend Guy Blog and you can read all about it here. It includes a total of seven bloggers, which includes me. I'm extremely proud and excited to be part of this project. It'll be very interesting to see how this index performs. Stay tuned! I'll be posting a little more information about my picks this coming Monday.

In investment news, one of my holdings-Harleysville Group (HGIC) has agreed to a buy out offer from Nationwide for $60 per share. This has caused this individual holding of mine to become overweight in my portfolio and I'll likely be taking the profit on Monday and reinvesting it. I would actually have done this yesterday, but I was too busy at work to get a moment to log in to my brokerage account. I was waiting for the dividend to be paid, which was paid on Friday. This is great news for me, as HGIC was trading for levels significantly below my cost basis. This has actually turned out to be one of my bigger winners ever.

Here are some excellent articles from fellow dividend growth investors, frugalists and personal finance bloggers from the past week.